We will all be talking about this week in the markets for many years to come, as it has the ability to change the way stocks trade for the foreseeable future. I have no idea how GME is staying up at these stratospheric levels, but it's a brave new world on Wall street.

Our AAPL trade was a success this week. AAPL is about 15% below the price we set of $155 for our max profit, and we were able to lock in almost a 20% profit. It might give you pause to risk $2.10 in a trade where you can only make $0.40, but I encourage you to consider the real probability that AAPL had of trading over $155 this week. I just don't see that event happening 1 out of 6 times, not even close. Whenever I consider any trade, I ask myself "if I make this trade one thousand times do I think I'll be profitable in the long run?" With so much volatility, rightfully so, priced into this market right now, there is volatility premium priced into options for some equities 2, or 3, or even 4+ standard deviations away from it's current price.

As we've seen with some of the retail darlings this week, anything can happen and occasionally stocks are going to blow away numbers and trade dramatically higher, like NFLX did last week on their numbers, but in the long run I really believe some of these trades we make far above or below the market are some of the most profitable in the long run. They don't come with as much glory as out of the money calls or puts that yield triple digit returns, as it almost seems mundane so make pennies on a trade when you risk $2.10, but you have to try and train your brain to process a 19% return in 3 days in a trade that had (in my opinion) a far greater chance than 19% of success in the long run.

AAPL took in $111B in revenue in 90 days, the expectation was $103B, and our trade reacted exactly as expected.

Our equities in this letter have traded with some serious volatility this week, as has the market, but I like most of the action. The only equity that gives me a slight pause is MCD, and we will keep our eye on it as it approaches the bottom range of its recent consolidation.

If this week has taught us anything, it's the benefit of defined risk in some of the options trades we make. Every options trade I talk about in this letter is completely defined. You know exactly how much money is at risk the moment you make the trade, and not a penny more. And many times, you should be prepared to lose 100% of the risk capital in any options trade we are making around earnings. You shouldn't be thinking about how much money you can make when initiating a trade, you should be thinking about how much money you can lose and planning accordingly.

I've talked about this many times over the last couple of weeks, as we sold a SPY credit call spread above the market, and with our recent AAPL trade, I see a much greater risk to the downside right now than versus the upside. The economy has a long way to go until we get back to anything resembling normal, meanwhile we sit at all-time highs. New strains of COVID-19 keep popping up, with yesterday's news having to do with the NVAX vaccine being 95.6% effective against the original COVID-19 vaccine strain, 85.6% against the UK variant strain, and yet only 60% effective against the South African strain.

There is a very real possibility that with the slow roll out of the vaccine worldwide, and new strains appearing that the vaccines are not as effective against, that things may not be as easy as we first thought at the start of November when Pfizer and Moderna first released their vaccine results.

This won't stop us from overcoming this virus, but it could delay things a bit, and I can't figure out whether the market has priced in this risk just yet as we still sit as basically all-time highs. If you plan on selling any equities in your portfolio anytime soon then you should consider lightening up right now. Things will get back to normal in the next 6-12-18 months and we will overcome this virus so in the long term the risks aren't as bad, but there could be some very volatile times ahead if the new strains start taking hold in the US and the vaccines are not as effective as first indicated versus the original strain.

As I just finished writing this letter and was about to hit the publish button, JNJ just came out with their efficacy numbers at 8am this morning and it is only 72% effective in the US and 66% effective overall, sending the markets lower - this is exactly what I'm talking about.

Next week continues with some big earnings, with AMZN on Tuesday among many others. Have a great weekend and stay tuned for updates!

Options Trades that expired Friday:
AAPL $155 - $157.50 Credit Call Spread for $0.40 credit ($2.10 max risk). This looks to expire today for a profit. AAPL is trading at $137.09.

Short Term portfolio:
None active

Long Term portfolio:
We are effectively long CRM at $215.35. CRM is trading at $226.50. Stop is $193.64.
Long half position in DIS at $118.63. Disney is trading at $171.88. Stop is $98.45.
Long half position in UBER at $31.50. Uber is trading at $51.58. Stop is $26.24.
Long half position in MCD at $216.91. MCD is trading at $206.82. Stop is $189.50.